AUGUST MARKET FLASH

HOLDING STEADY

Intro: The Northern California housing market continues to see median prices rise as sales decline, a sure sign that the top end of the market is keeping itself healthy with cash. The fact that medians are holding steady or increasing year-to-date is proof of the strong desire to live, work and play in the region. Read on.

Statistics:

Statewide: The median resale price of a single-family detached home in California for June was $594,260, an increase of about 3% over June 2006 and essentially flat for the month. Unsold resale inventory represented a 10.1 month supply, compared to 6.1 months for the same period a year ago. Median number of days till sale was 52 in June, up from 46 for June 2006.

Bay Area: June median price, at $842,600, is down a little over 1% for the month but still up over 5% for the year; sales are basically flat for the month and down about 21% for the year. San Francisco County median is a remarkable $930,000, almost 5% shy of last month’s record; sales are down 21% year-over-year. Santa Clara County median of $865,000 is flat for the month and up almost 6% for the year; sales are down 1.5% for the month and 18% for the year. Santa Cruz County sales activity rebounded 10% since May, the best showing this month, but is down 22% year-over-year and medians are essentially flat. Monterey Country and region medians are respectable, a little better than level, for both the month and year; sales activity is down 29% for the region and 36% for the County. Sonoma County’s median is 2.4% lower than last year’s, with sales down about 21%. Finally, San Benito County’s median is holding steady while sales are down over 30% for the month and over 60% for the year.

Sacramento/Capitol Region: Sales have increased in some areas of Sacramento proper and parts of Woodland, as well as Davis, Pollock Pines, El Macero and Fair Oaks. Median prices have increased in Rio Linda, Sloughhouse, Lincoln, Loomis, Galt and parts of Sacramento and Roseville. Regionally, year-over-year medians have declined 8.5% while sales have lost 26.5% since June 2006.

Interest Rates*: Thirty-year fixed at 6.87%, 15-year fixed at 6.51% and 5/1 ARM at 6.09%. Now, just as a year ago, the question is one of keeping the economy warm, but not letting it overheat and slip into inflation. The New York Times recently commented, almost wistfully, that at a time like this the famously opaque Mr. Greenspan would have been juggling rates to stimulate the economy, but the oddly laconic Mr. Bernanke may hold the line and let market forces do their best – or worst. After such a long period of a steady Fed funds rate, even a cut from 5.25% to 5% might have symbolic value far beyond its actual impact.

Inventory: In most areas, inventory is not an issue – although there are pockets throughout the Greater Bay Area – San Francisco and Peninsula communities included – that could always enjoy more supply.

Overall Assessment: Seize the day! Sellers should paint, polish and stage to their hearts content; Buyers may have these choices only once in a decade. Mortgages are more expensive and (alas) more difficult to get than we wish they were; but a clear shot at your dream house may be worth the bother of a refi down the line. Northern California is one of the world’s best places to live and not much could change that.

*Area interest rates are reported to be as follows:

Sacramento/Tahoe, San Francisco Bay Area and Silicon Valley regions: Princeton Capital reports that as of August 1, 2007, the 30-year fixed with one point is 6.750%, the 15-year fixed with one point is 6.500% and the 5/1 ARM with one point is 6.250%, on non-conforming loans of $500,000.